Foreclosure fall to 20-month low in county

Rob Varnon

Published 10:11 pm, Monday, March 25, 2013

The number of homes in foreclosure in Southwestern Connecticut fell to their lowest level in more than two years, though the activity is still higher than the national rate.
Photo: Joshua Lott, Bloomberg

The number of homes in foreclosure in Southwestern Connecticut fell...

The number of homes in foreclosure in Fairfield County fell to their lowest level since June of 2011, but activity remains stubbornly above the national rate.

CoreLogic, the California-based real estate data company, said Monday that 4.32 percent of all mortgages in Fairfield County were in the process of foreclosure in January, which is down 0.48 percent from a year ago.

The national rate fell to 2.9 percent and was 1.02 percent lower than in January of 2012.

Foreclosure activity, which jumped in 2007, has been abating across the nation.

"The backlog of distressed assets continues to fade as the foreclosure inventory has fallen to a level not seen since mid-2009, with less than 3 percent of all mortgages in foreclosure," Mark Fleming, chief economist for CoreLogic, said in the company's most recent report on foreclosures. "The improvement is widespread, as only six states and 13 of the largest 100 metro areas had an increase in the foreclosure rate year over year."

While many economists and real estate experts say Connecticut is starting to follow national trends, there are still some hiccups in the market that the foreclosure and delinquency reports have uncovered.

Connecticut was one of the states that saw the overall foreclosure rate increase, and while Fairfield County's numbers dropped in January, the population here is showing signs of continued financial stress.

The delinquency rate in the county, as measured by the number of mortgages that are 90 days late or more, has risen in each of the last three months and stood at 7.61 percent in January, well above the national rate of 6.34 percent.

Nick Perna, an economic advisor to Waterbury-based Webster Financial, said two things appear to be at work in Fairfield County and probably nationally. First, home prices are rising and that's helped reduce the number of people who are willing to walk away from their homes.

He said when a mortgage is under water, meaning the home's market value is less than the outstanding mortgage, it discourages some people from continuing to scrape up money to keep the home, and they let it go into foreclosure.

But as the market value of the home increases, people become hopeful they will have equity in the house again soon, so they work harder to keep their homes, the economist said.

On the delinquency front, Perna said there are more people working today than there were a year ago, but wages are down and taxes have gone up, so employees are taking home less.

According to the most recent report by the State Labor Department, the average salary in Fairfield County in the third quarter fell 2.4 percent, with those working in the financial industry suffered an 11 percent drop in pay compared with a year ago.

CoreLogic reported that of the towns and cities in southwestern Connecticut, only six communities had foreclosure rates of less than 2.8 percent, including Ridgefield and Westport. Sections of Greenwich and Stamford both registered foreclosures above that rate, joining the rest of the region that was designated as having high foreclosure activity.

Starting in January, many households had to grapple with higher taxes. The increase in the Social Security tax will cost a household making $100,000 a year about $2,000.

"But relief is on the way," Perna said, and it's actually expected to come from housing.

Housing prices and sales are expected to continue to climb and that's helping the construction industry and creating jobs, he said.